Chapter Three

Compound Journal Entry

A journal entry that affects more than two accounts.

General Journal

A listing of business transactions in chronological order. The journal links on one page the debit and credit parts of transactions.

Journal

A listing of business transactions in chronological order. The journal links on one page the debit and credit parts of transactions. Alternatively known as general journal.

Book of Final Entry

Book that receives information about business transactions from a book of original entry (a journal). Example: a ledger.

Book of Original Entry

Book that records the first formal information about business transactions. Example: a journal.

Fiscal Year

The 12-month period a business chooses for its accounting year.

Natural Business Year

The 12-month period a business chooses for its accounting year.

Calendar Year

The 12-month period a business chooses for its accounting year. Alternatively known as fiscal year and natural business year.

Transposition

The accidental rearrangement of digits of a number. Example: 152 S 125.

Accounting Period

The period of time for which an income statement is prepared.

Journal Entry

The transaction (debits and credits) that is recorded into a journal once it is analyzed.

Posting

The transferring, copying, or recording of information from a journal to a ledger.

Four-Column Account

A running balance account that records debits and credits and has a column for an ending balance (debit or credit). It replaces the standard two-column account we used earlier.

Cross Referencing

Adding to the PR column of the journal the account number of the ledger account that was updated from the journal.

Trial Balance

An informal listing of the ledger accounts and their balances in the ledger to aid in proving the equality of debits and credits.

Interim Reports

Financial statements that are prepared for a month, quarter, or some other portion of the fiscal year.

Accounting Cycle

For each accounting period, the process that begins with the recording of business transactions or procedures into a journal and ends with the completion of a post-closing trial balance

Slide

he error that results in adding or deleting zeros in the writing of a number. Example: 79,200 S 7,920.

Journalizing

he process of recording a transaction entry into the journal.